We present a novel approach to integrate transliteration into Hindi-to-Urdu statistical machine translation. We propose two probabilistic models, based on conditional and joint probability formulations, that are novel solutions to the problem. Our models consider both transliteration and translation when translating a particular Hindi word given the context whereas in previous work transliteration is only used for translating OOV (out-of-vocabulary) words. We use transliteration as a tool for disambiguation of Hindi homonyms which can be both translated or transliterated or transliterated differently based on different contexts. We obtain final BLEU scores of 19.35 (conditional probability model) and 19.00 (joint probability model) as compared to 14.30 for a baseline phrase-based system and 16.25 for a system which transliterates OOV words in the baseline system. This indicates that transliteration is useful for more than only translating OOV words for language pairs like Hindi-Urdu.